Monday, 25 April 2016

... last week, Chancellor George Osborne launched a thumping 200-page “Treasury study” into the long-term implications of leaving the EU, which “forecast a £4,300 fall in GDP per household” if we leave For many millions of voters, that’s a scary number – around a quarter of today’s average disposable income...

The UK economy will grow by 37pc between now and 2030, the Treasury estimates, compared to 29pc if we choose Brexit. Of course, one and three-year growth forecasts by the Treasury and others are nearly always wrong, let alone GDP estimates going over a decade into the future.

Let’s put that to one side for now, though, and consider how and why those post-Brexit and no-Brexit figures were then converted into differences in “GDP per household”. For one thing, while GDP is obviously a widely-used concept, it’s far broader than disposable household income, given that it includes extensive corporate activity and tax.

So, while today’s GDP per household is around £67,000, disposable income (what ordinary voters actually care about) is close to £45,000. So the Treasury has used the widest possible concept of income so the absolute difference generated by its 2030 growth forecast inside and outside of the EU is as large as possible.

Then, that GDP difference is divided not by the number of households in 2030, estimated at around 31m, but by today’s smaller number of 27m – so further boosting that headline difference in GDP per household. This is not only incredibly dishonest, but plain wrong.

I particularly like the point that the Bremainers estimate that UK GDP would grow by 29% over the next fourteen years if we leave. That's good enough for me.

Others have already pointed out that the Bremain estimates assume significant net immigration.